Bad loans increased

The recent official data from Bank of Albania show that during the July-September period, the unpaid loans in banks increased with 1.5%, while compared to one year ago they were 4.7% higher.

There are 1.26 billion USD in total, or more than 10% of the GDP. After 2009, the bad loans have increased each year by reflecting the slow economic growth and the shrinking of the disposable income in economy.

This growth has also been fuelled by another factor, which is related with the budget financial difficulties. In the last two years, the government has created a wide network of unpaid obligations to private companies that have realized public works, mainly in construction.

The World Bank declared a few days ago that the number might range from 1.5 to 2% of the GDP. Although it was never admitted by the Government and the Bank of Albania, which is the main responsible for the financial stability of the country, IMF and the World Bank insist that the hidden budget obligations have transferred the debt chain to the banks.

Without being paid by the government, the businesses are unable to pay their loans. The bad loan increase was one of the concerns identified by the IMF in their last mission in Albania. IN a public declaration, the Head of the IMF asked the government to intervene with urgent measures, initially by paying all obligations to the private sector and by reinforcing the bailiffs for the executions.

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